Kennametal (KMT) Stock Forecast & Price Target

Kennametal is positioned favorably because its FY4Q results showed powerful pricing and margin leverage, with adj. EPS of $2.96 beating consensus by $0.65 and sales of $737M topping expectations while gross margin expanded to 58.9% from 28.2% last year. Its outlook is strengthened by a multi-year industrial upcycle led by aerospace & defense and energy, plus a second consecutive quarter of organic volume growth in FY3Q26 and the potential for ~3% volume growth in FY27. The company also appears advantaged by resilient tungsten sourcing through Bolivia and recycling, which cushions it from China-related supply controls and could support share gains, normalized FCF into FY2H27, and further EPS upside.

Kennametal is facing a weak fundamental setup because FY27 guidance for $3.33-$3.45B in sales and $4.15-$5.15 in adjusted EPS appears dependent on temporary benefits, including raw-material timing, lower incentive compensation, and restructuring savings, rather than durable operating momentum. Beneath that, the implied core operations picture is negative, as higher wages and inflation more than offset modest volume leverage, while stabilization in tungsten prices could reverse the roughly $2.45 EPS tailwind realized during FY26 and trigger unfavorable estimate revisions. Demand also looks structurally challenged, with energy exposure near 13% and automotive at 15%-16% facing limited growth, making meaningful EPS expansion reliant on harder-to-deliver outperformance in aerospace and other markets.